As a final decision from regulators nears on Verizon Wireless' $4 billion deals for advanced wireless spectrum with four big cable systems, opponents including two congressmen on Friday, Aug. 10, pressed what might be a last chance to turn regulators against the transactions.
"There are many troubling aspects of these deals," said Rep. Jerry Nadler, D-N.Y. "We should be very careful about approving deals that make collaborators out of competitors. We want firms to compete, not capitulate."
Rep. Brian Higgins, D-N.Y., also rapped the deals. "Substantial harm would occur if [they] were allowed to go through," he said.
The comments were delivered at a news conference in which the congressmen, representatives of the Communications Workers of America, and an official of Consumers Union questioned the two deals and also Verizon's claim that they wouldn't affect competition because the company wasn't going to build out its Fios network to additional cities anyway.
In the two deals, Verizon is trying to buy unused wireless spectrum from Comcast Corp., Cox Communications Inc. Time Warner Cable Inc., and Bright House Networks LLC. The four cable systems would then market Verizon Wireless' services to their subscribers, while Verizon would market the four cable systems to its subscribers.
The Justice Department is reviewing antitrust implications of the deal, while the Federal Communication Commission is reviewing the spectrum sales' public interest implications.
The review is expected to finish before August ends and is likely to include conditions that would limit the amount of spectrum Verizon could obtain in some Eastern U.S. markets where it already has extensive spectrum.
The critics on Friday called for far more extensive conditions than the regulators are expected to impose, warning the deals' impact would go beyond the spectrum transfer and could raise pricing and lessen competition in many areas for cable systems and for mobile.
"No matter how you try to dress this up, this is a cartel in disguise," said David Balto, a former Federal Trade Commission assistant policy director, representing the CWA.
"Rather than having to fight it out, the cable companies and Verizon have entered into a sweetheart deal. This is as if Coke and Pepsi said we need to cross-market each other's products."
Debbie Goldman, telecommunications policy director with CWA -- the union is currently in the midst of negotiating a new contract with Verizon -- said at the minimum the union wants Verizon barred from jointly marketing services with cable systems anywhere Verizon has landline business.
She and Balto also questioned Verizon's suggestion that it wouldn't build out Fios to additional markets because of the high costs of doing so. "Fios is extremely profitable," said Goldman. She said Verizon's initial statement that it wouldn't enter other markets because of cost was made to Wall Street before it became apparent how profitable Fios would become and could change.
Balto called Verizon's statement that it wouldn't add Fios markets a "deathbed conversion" similar to that made by other companies when they make deals in hopes of achieving regulatory approval. He said a tough stance by regulators could prompt Verizon to revive its expansion plans.
A Verizon spokesman noted that Verizon's wireline service exists in only 15% of the country and the spectrum deals would allow Verizon to more fully compete in the other 85%. He said that Verizon isn't adding Fios markets because it still has to complete existing markets including in Washington, Philadelphia and New York, a task that won't be finished until 2016.